Lufthansa would "seriously consider" buying German air traffic control (ATC)provider DFS if it were to be privatised, as part of a strategy to become more influential in infrastructure expansion and modernisation in its capacity-constrained home market.

Although admitting that investing in an ATC business goes against Lufthansa's policy of moving out of non-core areas, "if you have strategic bottlenecks which decide if you can grow or not it makes sense to invest," says Dr Christoph Klingenberg, executive vice-president responsible for group infrastructure. Lufthansa hopes the German government will find the time in its next legislative period from September to change the law governing the DFS and enable it to be privatised, possibly by 2004-5, he adds.

The privatisation of the UK's National Air Traffic Services, bought by a consortium of UK airlines in the middle of last year, is the model likely to be followed. Lufthansa would be happy to buy into DFS with other airline partners, Klingenberg says. As the flag carrier lobbies for DFS privatisation, it is also still trying to persuade the corporatised company not to delay any of its planned investment in ATC system modernisation, he adds.

"From our point of view [ATC] privatisation is not the top target in Germany," says DFS chief executive Dieter Kaden, who also points out that it would require a fundamental change of the country's constitution. Since being corporatised in 1993, he argues that DFS has created an organisation with more flexible labour contracts that is entirely self-sufficient in financial terms with the ability to borrow on commercial markets. Under its current regime, DFS has the necessary freedom to operate along the lines of a private company, and that privatisation is not necessarily the key to creating the most efficient ATC operation, he adds.

On the airport front, the priorities for Lufthansa's Klingenberg are new runways at Frankfurt and Munich. The planning process for Frankfurt's fourth runway is expected soon to move into the tough public and regional government consultation phase, with the final decision most probably going to Germany's highest court. Construction could start as early as 2004-5, with completion taking two years. There is also the prospect of a third terminal at Frankfurt, which could enter operation in 2007.

By that time, Munich's two-runway system will be reaching full capacity, and Lufthansa is asking the airport to begin planning a third runway ready to enter service in 2008-9, says Klingenberg.

Source: Airline Business